Award: Best CEO-Multinational
Keita Muramatsu
President and CEO, Honda Motorcycle and Scooter India (HMSI)
Age: 54
Interests outside of work: An accomplished drummer, he plays the instrument at company gatherings
Why they won this award: For consistently increasing HMSI’s share in the two-wheeler market. While the Activa scooter is the largest-selling two-wheeler in India, HMSI has made a promising start with its entry-level motorcycles
Ask Keita Muramatsu to rate his performance and pat comes the reply, “S for superb.” After spending three years in India, the 54-year-old president and chief executive of Honda Motorcycle and Scooter India (HMSI) has every reason to be proud of his company’s performance. Sales have doubled from 1.6 million scooters and motorcycles a year when he took over in April 2011 to 3.7 million units in the year ending March 2014, beating the industry growth rate by two times. It is, by far, the leader in the scooter segment and has made a strong showing in the hyper-competitive market for motorcycles.
It is also the manner in which Muramatsu has gone about increasing HMSI’s market share that has caught the attention of industry watchers. A master tactician with an unexpected understanding of the Indian market, he has planned for a long and bruising fight with motorcycle leader Hero MotoCorp and smaller rivals, Bajaj Auto and TVS Motor Company. “When I came to India, we had a lot of back orders especially for scooters. My immediate challenge was to get production up. Later, we focussed on expanding our dealer base,” says Muramatsu.
Surjit Arora, an analyst who tracks auto for brokerage firm Prabhudas Lilladhar, describes HMSI’s approach to India as a measured one, and this has allowed the company to lay a strong foundation for the future. “I see HMSI carving out a 20 percent share in the motorcycle market in the next five years. It will, of course, maintain its leadership position in the scooter market,” he says.
Some numbers first. The largest selling two-wheeler in the country is a scooter—and not a motorcycle— and it is here that Honda has a stranglehold. Its ungeared Activa scooter, launched in 2001 to jumpstart a sluggish market, raced ahead of its rivals by such a wide margin that company officials say there really is no competition for them in this segment. Success has not stopped Muramatsu from improving on the model and plotting ways to increase its popularity: At 1.95 lakh units a month, the Activa scooter outperforms India’s fastest-selling motorcycle, Hero MotoCorp’s Splendor, by 30,000 units.
While the two-wheeler market has grown annually by a subdued 9 percent over the last three years, the scooter market has clocked a growth rate in excess of 30 percent for the same period. And it is here that HMSI has managed to make the most of its bestselling product.
Muramatsu would like nothing more than to replicate this success in the motorcycle segment. HMSI has been aggressively marketing its entry-level motorcycles, Dream Yuga and Dream Neo, which have begun to make their presence felt in the last one year, after they were launched in May 2012 and April 2013 respectively. “I want to increase the number of units HMSI sells to 4.5 million by 2015,” says Muramatsu. If he does that, HMSI would have grown at 21 percent, or twice the market growth rate.
From Formula One to rural India
Muramatsu’s Indian assignment is a far cry from his previous position at Honda. Before he was appointed chief executive of the Indian two-wheeler business, he was the general manager of Honda Motor Company’s motorsports division, and was responsible for its performance in car rallies and water sports (Honda manufactures motorboards, jet skis like the Honda AquaTrax and personal water craft). But he seems as much at ease in India as he was in the Formula One circuit. This is a different kind of race, one that will pit Honda against its former partner Hero MotoCorp, and one that, now, is beginning to unfold in the rural arena.
Muramatsu came to India a year after the parent companies, Honda and Hero Group, dissolved their 26-year-old joint venture, Hero Honda, in 2010. It is believed that Honda had asked for the dissolution of the JV as the two companies were now competing on similar products. Apart from wanting to focus on its wholly-owned Indian subsidiary, HMSI, which was founded in 1999, the Japanese company was getting ready to manufacture 100cc bikes that would be in direct competition with Hero’s models. As per the terms of the dissolution, the Japanese company would continue to supply technology to Hero MotoCorp till this year.
Muramatsu has a two-fold agenda for HMSI: Maintain and better its performance in the scooter segment, and take the lead in the motorcycle market. When HMSI started its India operations, the scooter market was comatose: Consumer preference had started shifting to motorcycles by the late 1990s. This had caught hitherto industry leader Bajaj sleeping, leaving HMSI to run away with a large slice of the market with its hugely popular Activa.
Muramatsu also acclimatised himself to logistical challenges such as getting component vendors to open operations near HMSI’s plants. Almost all auto companies outsource the manufacturing of some, if not all, of their components, but vendors have to be motivated by large volumes to set up operations near the company’s factory. Honda decided to go for broke. The result: With an output of 1.8 million two-wheelers a year, the Bangalore plant is the largest in the world. Since then, Honda has announced its plan to build a fourth factory near Ahmedabad in Gujarat.
(This story appears in the 17 October, 2014 issue of Forbes India. To visit our Archives, click here.)